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Far East Hospitality Trust posts 30.7% lower DPS of 1.38 cents for 2H20

Felicia Tan
Felicia Tan • 3 min read
Far East Hospitality Trust posts 30.7% lower DPS of 1.38 cents for 2H20
This brings DPS for the FY2020 to 2.41 cents, 36.7% lower than DPS of 3.81 cents in FY2019.
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The manager of Far East Hospitality Trust (FEHT) reported a distribution per stapled security (DPS) of 1.38 cents for the 2HFY2020 ended December, 30.7% lower than DPS of 1.99 cents.

This brings DPS for the FY2020 to 2.41 cents, 36.7% lower than DPS of 3.81 cents in FY2019.

Gross revenue for the 2HFY2020 fell 34.8% y-o-y to $39.0 million, while FY2020 gross revenue fell 27.9% y-o-y to $83.3 million.

The lower figures were due to a decline in master lease rentals for the trust’s hotels and serviced residences due to the Covid-19 outbreak.

The master leases, which has a high fixed rent component, mitigated the results for the trust’s stapled securityholders.

Average occupancy of the hotels improved 3 percentage points y-o-y to 92.5% in 2HFY2020, while the average daily rate (ADR) fell 57.9% y-o-y to $69 due to the lower-rated business from the government for isolation purposes and companies housing their workers.

See also: Econ Healthcare reports 8% y-o-y growth in earnings of $6.3 mil for FY2024

As a result, revenue per available room (RevPAR) fell 56.5% y-o-y at $64 in 2HFY2020.

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FY2020 average occupancy for hotels fell 4 percentage points to 85.1%, leading to a 47.2% y-o-y decline in ADR of $84.

See also: Delfi's lower earnings of US$23.3 mil for 1QFY2024 due to consolidated net sales

FY2020 RevPAR fell 50% y-o-y to $71.

2HFY2020 average occupancy for serviced residences fell 1.1 percentage points to 84.9%, while the ADR fell 18.2% y-o-y to $180.

Revenue per available unit (RevPAU) for serviced residences for the 2HFY2020 fell 19% y-o-y to $153.

The average occupancy for serviced residences in FY2020 increased 0.3 percentage points to 83.8%, while ADR fell 12.4% y-o-y to $190.

RevPAU for serviced residences in FY2020 fell 12.6% y-o-y to $159.

Revenue from the retail and office spaces fell by 36.6% y-o-y in 2HFY2020 due to the rental rebates given and lower occupancies.

2HFY2020 net property income (NPI) fell 38.0% y-o-y at $33.6 million.

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FY2020 NPI fell 30.8% y-o-y to $72.2 million.

Finance costs in the 2HFY2020 fell 23.1% y-o-y to $24.2 million mainly due to lower short-term interest rates, while finance costs in FY2020 fell 18.9% y-o-y to $24.2 million.

SEE: Far East Hospitality Trust bolstered by transient demand and its master lease: Maybank

As such, income available for distribution for the 2HFY2020 fell 29.5% y-o-y to $27.5 million.

Income available for distribution in FY2020 stood 35.2% lower y-o-y at $47.9 million.

As at end-December, cash and cash equivalents stood at $10.9 million.

In the longer-term, the manager says it remains positive on the hospitality sector and expects a gradual recovery to happen with the rollout of Covid-19 vaccines around the world.

“Singapore is well-positioned to bounce back as a hub for corporate travel with strong foreign direct investment commitments,” it says.

“Despite facing an unprecedented shock to the hospitality industry, Far East H-Trust managed to deliver a modest distribution for FY 2020. Within our portfolio, the serviced residences, which had a larger base of long-term contracts, performed better than the hotels,” says Gerald Lee, CEO of the manager.

“The gross revenue for our trust is protected by the fixed rent component of the master leases, which formed about 77% of gross revenue for FY2020. The fixed component, with its minimum rental payment, provides downside protection for stapled securityholders and mitigates the impact of the volatility experienced during adverse economic or environmental circumstances,” he adds.

Units in FEHT closed flat at 57.5 cents on Feb 10.

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